While for some mention of “Cape Town” may conjure up images of Table Mountain, the harbour, and surrounding vineyards, for those in the Aviation business Cape Town was the location for a diplomatic conference in 2001 to negotiate a treaty to standardise transactions involving moveable property; including contracts of sale, security interests, leases and conditional sale agreements. It also sought to harmonise the effect of insolvency law on mobile assets such as aircraft and the various legal remedies, including repossession, for default in mobile equipment financing agreements. In particular, the intention of the conference was to align on the one hand the legal and administrative systems of emerging economies wanting access to aviation equipment and finance, with on the other hand those more developed countries manufacturing aircraft wanting to supply them.
The diplomatic conference in Cape Town resulted in a treaty being entered into. The treaty came into effect by being ratified by a number of governments and finally in order for the treaty to become operative, it needed to be implemented into domestic law of countries that had ratified the treaty. The United Kingdom has now passed the necessary law to implement the treaty from 1 November 2015.
The main changes in UK law will be:
To require international aircraft transactions of sale, security interests, leases and conditional sale agreements to be registered in the International Registry of Mobile Assets.
To extend the remedies for creditors in aircraft financing transactions .
To introduce a new insolvency regime for aircraft for aircraft assets giving creditors 60 days to re-possess aircraft assets or for insolvent aircraft operators to cure the breach of their financing agreement.
To change the law on how and when interests in aircraft and engines can be created and in what priority.